The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) and the Schwab U.S. Large-Cap Growth ETF (SCHG) are both among the Top 100 ETFs. EMB is a iShares Emerging Markets Bond fund and SCHG is a Schwab ETFs Large Growth fund. So, what’s the difference between EMB and SCHG? And which fund is better?
The expense ratio of EMB is 0.35 percentage points higher than SCHG’s (0.39% vs. 0.04%). EMB is mostly comprised of BBB bonds while SCHG has a high exposure to the technology sector. Overall, EMB has provided lower returns than SCHG over the past 10 years.
In this article, we’ll compare EMB vs. SCHG. We’ll look at performance and industry exposure, as well as at their risk metrics and fund composition. Moreover, I’ll also discuss EMB’s and SCHG’s portfolio growth, annual returns, and holdings and examine how these affect their overall returns.
|Name||iShares J.P. Morgan USD Emerging Markets Bond ETF||Schwab U.S. Large-Cap Growth ETF|
|Category||Emerging Markets Bond||Large Growth|
The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) is a Emerging Markets Bond fund that is issued by iShares. It currently has 19.76B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 3.85% with an expense ratio of 0.39%.
The Schwab U.S. Large-Cap Growth ETF (SCHG) is a Large Growth fund that is issued by Schwab ETFs. It currently has 15.16B total assets under management and has yielded an average annual return of 17.81% over the past 10 years. The fund has a dividend yield of 0.43% with an expense ratio of 0.04%.
EMB’s dividend yield is 3.42% higher than that of SCHG (3.85% vs. 0.43%). Also, EMB yielded on average 11.38% less per year over the past decade (6.43% vs. 17.81%). The expense ratio of EMB is 0.35 percentage points higher than SCHG’s (0.39% vs. 0.04%).
|EMB Bond Sectors||Weight|
EMB’s Top Bond Sectors are ratings of BBB, B, BB, A, and AA at 33.79%, 21.97%, 16.92%, 13.67%, and 7.97%. The fund is less weighted towards Below B (4.49%), Others (1.11%), and AAA (0.09%) rated bonds.
|Facebook Inc A||4.45%|
|Alphabet Inc A||3.93%|
|Alphabet Inc Class C||3.82%|
|Visa Inc Class A||2.12%|
|UnitedHealth Group Inc||2.02%|
SCHG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 11.49%, 10.91%, 7.89%, 4.45%, and 3.93%.
Alphabet Inc Class C (3.82%), Tesla Inc (2.8%), and NVIDIA Corp (2.67%) have a slightly smaller but still significant weight. Visa Inc Class A and UnitedHealth Group Inc are also represented in the SCHG’s holdings at 2.12% and 2.02%.
The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a R-squared of 23.34 with a Standard Deviation of 8.44 and a Beta of 1.36. Its Treynor Ratio is 3.24 while EMB’s Mean Return is 0.44. Furthermore, the fund has a Sharpe Ratio of 0.55 and a Alpha of 0.89.
The Schwab U.S. Large-Cap Growth ETF (SCHG) has a Mean Return of 1.46 with a Alpha of 1.97 and a Treynor Ratio of 16.3. Its R-squared is 92.92 while SCHG’s Standard Deviation is 14.78. Furthermore, the fund has a Sharpe Ratio of 1.14 and a Beta of 1.05.
EMB’s Mean Return is 1.02 points lower than that of SCHG and its R-squared is 69.58 points lower. With a Standard Deviation of 8.44, EMB is slightly less volatile than SCHG. The Alpha and Beta of EMB are 1.08 points lower and 0.31 points higher than SCHG’s Alpha and Beta.
EMB had its best year in 2012 with an annual return of 17.64%. EMB’s worst year over the past decade yielded -7.42% and occurred in 2013. In most years the iShares J.P. Morgan USD Emerging Markets Bond ETF provided moderate returns such as in 2014, 2011, and 2016 where annual returns amounted to 6.69%, 7.2%, and 9.41% respectively.
The year 2020 was the strongest year for SCHG, returning 39.13% on an annual basis. The poorest year for SCHG in the last ten years was 2018, with a yield of -1.35%. Most years the Schwab U.S. Large-Cap Growth ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 15.74%, 16.83%, and 17.02% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in EMB would have resulted in a final balance of $17,309. This is a profit of $7,309 over 10 years and amounts to a compound annual growth rate (CAGR) of 6.43%.
With a $10,000 investment in SCHG, the end total would have been $47,556. This equates to a $37,556 profit over 10 years and a compound annual growth rate (CAGR) of 17.81%.
EMB’s CAGR is 11.38 percentage points lower than that of SCHG and as a result, would have yielded $30,247 less on a $10,000 investment. Thus, EMB performed worse than SCHG by 11.38% annually.
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